Capital mobility ? a resource curse or blessing? How, when, for whom?

Hikaru Ogawa, Jun Oshiro () and Yasuhiro Sato
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Jun Oshiro: Graduate School of Economics, Osaka University (Japan)

No 12-05, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper investigates which of the two countries \resource-rich or resourcepoor \ gains from capital market integration and capital tax competition. We develop a framework involving vertical linkages via resource-based inputs as well as international fiscal linkages between resource-rich and resource-poor countries. Our analysis shows that capital market integration causes capital flows from resourcepoor countries to resource-rich countries and thus improves production efficiency and global welfare. However, such gains accrue only to resource-poor countries, and capital mobility might even hurt resource-rich countries. In response to capital flows, the governments of both resource-rich and resource-poor countries have an incentive to tax capital. Such taxations would enable resource-rich countries to exploit their efficiency gains through capital market integration and become winners in the tax game.

Keywords: capital market integration; natural resource; resource curse; tax competition (search for similar items in EconPapers)
JEL-codes: F21 H20 H77 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-03
New Economics Papers: this item is included in nep-opm and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1205

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